MRVI (2025 - Q1)

Please stand by, we're about to begin. Good afternoon, everyone, and welcome to the Maravai LifeSciences Q1 2025 Results Earnings Call. [Operator Instructions] Also, today's call is being recorded. [Operator Instructions] At this time, I'll turn things over to Ms. Deb Hart, Head of Investor Relations. Please go ahead, ma'am. Debra Ha

Good afternoon, everyone. Thanks for joining us for our first quarter 2025 earnings call. Our press release and the slides accompanying today's call are posted on our website and available at investors.maravai.com. As you can see from our agenda for today on Slide 2, Trey will first provide you with a business update and Kevin will review our financial results and guidance; Becky Buzzeo, our Chief Commercial Officer, will join the call for the question-and-answer session following the prepared remarks. During today's call, management will make forward-looking statements and refer to GAAP and non-GAAP financial measures. It's possible that actual results could differ from management's expectations. We refer you to Slide 3 for more detail on forward-looking statements and our use of non-GAAP financial measures. Our just issued press release provides reconciliations to the most directly comparable GAAP measures, and we also post reconciling schedules to the IR website. Please also refer to Maravai's SEC filings for additional information on risks and uncertainties that may impact our operating results, performance, and financial condition. Now I'll turn the call over to Trey.

Thank you, Deb, and good afternoon, everyone. We appreciate having you join us for the call today. I will summarize our Q1 revenue results and provide commentary on tariff and trade dynamics, I'll then showcase some of the innovative technologies we've launched and share business updates, including progress on the integration of our two recent acquisitions, before handing the call back over to Kevin. Let's start with our first quarter results on Slide 5. Today we reported $47 million in revenue for Q1. This exceeded the range of expectations we shared with you during our fourth quarter conference call. And we're pleased with the base business growth of more than $4 million from fourth quarter of '24. As a reminder, our base business excludes any revenue for high volume CleanCap for commercialized vaccines, which we have not included in the forecast for 2025. Our Nucleic Acid Production, or NAP, segment had revenue of $29 million in Q1, an increase of $1 million from the $28 million of base NAP revenue in Q4 2024. The Biologic Safety Testing segment, or BST, revenue was $18 million in the first quarter, up $3 million over Q4 '24 and flat to Q1 '24. Q1 was the strongest quarter for our BST business last year. Revenues by customer type in Q1 were 29% biopharma, 28% life science and diagnostics, 6% academia, 7% CDMO, and 30% through distributor. Our revenue by geography was 62% North America, 15% EMEA, 15% Asia Pacific, and 8% in China. Please move to Slide 6, and we'll discuss the potential impact of tariffs and trade to Maravai. This issue continues to be a very dynamic situation as it is within our industry and the broader global economy. A reminder here that our manufacturing footprint for TriLink, Cygnus, and AlphaZyme is 100% U.S. based. From a cost of goods standpoint, the vast majority of our supply chain is also U.S. based and our team is currently working to investigate Tier 2 and Tier 3 supply inputs to assess potential risks and mitigate wherever possible. I'd like to point out that our strategy of having an integrated vertical ecosystem for genomic medicines in our NAP segment has prepared us for this potentiality through the acquisitions we've made over the last several years, beginning with MyChem, which is U.S.-based chemistry inputs and R&D; continuing with AlphaZyme, which is U.S.-based enzyme production and R&D; and most recently with Molecular Assemblies, which is U.S. based DNA production and a technology platform. We have pursued a vertical integration strategy for reasons of quality differentiation, speed, and total product cost. Due to the critical participation TriLink played in the pandemic response, out of that necessity, we had also begun supply chain security work during the pandemic. From an input cost perspective, we have therefore been in process to minimize imported inputs for the last several years. For those items which still come from other countries, we've been actively validating alternate suppliers and working with vendors. To date we have not seen any material impact from tariffs on inputs, but we continue to work on the situation daily. On the export side, our BST business has the majority of our China exposure with $3.8 million, or 21% of the reported $18 million in BST revenue from Q1, coming from China. Based on the work we've done to date, we believe we've mitigated our first half impact from China tariffs, and we're working closely with our distribution partners to further mitigate potential impacts in the second half. Kevin will go into more detail on our Q1 results and our mitigation efforts for potential tariffs later in the call. We remain keenly focused on our return to growth strategy and building a diversified, predictable franchise as a life science tool provider and clinical partner. To enable long-term sustainable growth for our business, we continue to place prudent, educated bets and expand our product and services portfolios. We expect to further advance our market leadership in genomic medicines and drive the introduction of scientific innovation in ways that support and accelerate our customers program to build long-term value across Maravai. To the point on our portfolio expansion and business diversification, let's turn to Slide 7 for some updates in our Nucleic Acid Production segment. In our TriLink Discovery product portfolio, we're very excited to launch a new technology to enhance mRNA performance, our Poly(A+) line. mRNA through its natural design is a linear molecule, meaning that it has a beginning, a front end, and a back end. The information that sits between those bookends is the genetic code that is specific to the protein the mRNA will express in the natural process called translation. Recent research and clinical development have demonstrated the importance of various modifications through chemical or enzymatic methods across the entire mRNA sequence from cap to tail and everything in between, which can result in translational activity being enhanced while reducing innate immunogenicity risks. TriLink's CleanCap technology was developed to be the gold standard for the cap, or to protect and enhance the front end of the mRNA molecule. Intuitively, protecting both ends of the molecule is critical from the perspective of extending the stability and longevity of the mRNA. With that in mind, TriLink has developed a proprietary toolkit of Poly(A) tail modifications to protect and enhance the back end of the molecule, which in early data have shown in vitro and in vivo to both increase protein expression and extend duration of expression of the mRNA molecule in certain circumstances. We believe that simultaneously optimizing both the cap and the tail, or the beginning and the end, will enhance the potency of the molecule to expand the potential use of mRNA in the next generation of genomic medicines. We demonstrate the impact of this enhancement on Slide 8, where a picture speaks a thousand words. Here, you can visually appreciate the extension of expression pattern of a fluorescent reporter gene in mice who have been injected with the mRNA with and without the new tail modification. The combination of the M6 cap with the modified tail results in an extension of the standard kinetic expression profile. The inclusion of these modifications into an mRNA product could potentially expand its clinical application and the therapeutic windows being considered. This new technology, which is patent pending, is now available as a service offering from TriLink, and we will be presenting it at an industry conference in San Diego next week. Turning to Slide 9 for some further NAP innovation highlights. I'm pleased to announce that our TriLink Discovery unit now offers high-fidelity HPLC purified guides for CRISPR. TriLink offers custom individualized discovery guide RNAs designed to advance CRISPR-based cell and gene therapies through high-purity processes, expanded modifications, and lengths up to 160 bases. With over two decades of DNA and RNA manufacturing experience, our guide RNA synthesis services are customizable featuring process development and consultative support from our oligo experts. Our guide RNAs, which have improved in purity and expanded modification capabilities, are preferred by CRISPR cell and gene therapy customers for preclinical projects and are often ordered in combination with high-fidelity mRNA also from TriLink Discovery. We've enhanced our oligo business with the recent acquisition of Molecular Assemblies assets, which closed in Q1. We have completed the chemistry tech transfer and are already producing oligos over 200 bases. This technology is well suited to moving to 400 bases and beyond, which can enable and enhance several applications. The integration is ahead of schedule, and we're very pleased with the high-purity results from our early synthesis runs. Not only does this expand our oligo product portfolio, as planned, we are on track to vertically integrate this process by using our own chemistries, enzymes, and proprietary technologies as inputs to provide significant cost of goods benefit that we can pass on to our customers. These long oligo inputs will also be used to create DNA templates for our mRNA production. We have officially launched our process development services. This is something we've done informally for our customers on a project-to-project basis and have built on that successful foundation to offer a formal service to all customers. With the acquisition of Officinae Bio, we now offer adaptive, machine learning DOE optimization strategies for faster and more efficient identification of optimal reaction conditions. Our process development services include bespoke mRNA sequence and manufacturing optimization, including codon optimization and UTR tuning to boost in vivo expression; Design of Experiment studies to meet manufacturing targets; and scale-up support for our clinical customers. This will help our customers confidently move from product inception through clinical development, all while leveraging our full suite of tailored analytical services, and we believe these services can bring real value to our customers. We continue to leverage the synergies between TriLink and AlphaZyme by launching additional IVT enzymes to improve the mRNA workflow and provide additional costs benefits through vertical integration. During the first quarter, we had 30 TriLink customers also order IVT enzymes through our cross-selling efforts. Our innovation engine is strong in both NAP and BST. More on BST in a few slides. We intend to launch many additional products as we move forward, and we are engaging more deeply with customers as we support their research programs with custom constructs. We also continue to bolster our market leadership in the mRNA and genomic medicine space through strategic partnerships and CleanCap license and supply agreements. We have signed five additional license and supply agreements for CleanCap year to date, bringing our total to 48. Our licensees represent global customers spanning the spectrum from large pharma to innovative biotech and a mix of clinical, commercial, academic, CDMO enablement and nucleic acid manufacturing platforms. Additionally, we are proud of our 18 current academic innovation partnerships and collaborations to allow us to maintain cutting-edge science and research. By fostering these relationships, we are able to provide foundational support to universities, enhancing our synergistic research, while additionally assisting these entities to navigate current funding challenges. We believe that investing in new products and services and partnering with leading industry and academic partners is a key driver for creating long-term value. We are in an exceptional position to win customers early for product and technology adoption and grow with them as their programs advance through the clinic. Let's turn to Slide 10 for an update on the pipeline for preclinical and clinical programs. Following our Q4 call, we received positive feedback from many of you regarding the business intelligence tool we have developed to track mRNA and guide RNA pipeline progression. You may recall that we identified approximately 1,500 discovery and development stage candidates currently in the pipelines we track and that through the end of 2024, 477 of those programs were in the clinic. Today, we're showing updated insights from the pipeline database in response to some follow-up questions we received last quarter, particularly around the program attrition and exit velocity. The data continues to show sustained investment and interest in early-stage research. In Q1 alone, 95 new preclinical programs were added and 14 programs advanced into clinical development. 91 preclinical programs were discontinued or became inactive during the quarter. While attrition is a natural part of the process, the overall trend across discovery and clinical remains positive. We continue to see estimated net growth in the development pipeline with CleanCap customers representing over 35% of these programs. Although not all preclinical drug assets are publicly disclosed and captured in our data, for the programs that are covered in our data, more than 25% advance into the clinic. Let's turn to Slide 11 and our Biologic Safety Testing business updates under the Cygnus Technologies brand. As with the Nucleic Acid segment, we continue to innovate to bring improved products and services to market that support our customers. In collaboration with the TriLink team, Cygnus expanded the AccuRes host cell DNA quantification portfolio with two additional kits. We now have analytics in this portfolio for CHO, E. coli in all human cell lines. All kits in the AccuRes portfolio contain TriLink's CleanAmp technology, building on the collaboration between our two brands. A new kit was also added to the MockV product line, the RVLP Inactivation Kit. Like the original MockV RVLP kit, it lets researchers include viral clearance testing early in the development and optimization of their manufacturing processes. By integrating viral analytical studies early, companies can streamline development timelines and move more confidently into clinical and commercial manufacturing. We also recently developed process-specific host cell protein analytics for one of the world's top 3 biologic CDMOs, supporting their two premium CHO cell line-based development and manufacturing activities. Many biopharma companies rely on this CDMO for their clinical program development. Similar to our approach in the NAP segment, we expect to continually enhance our BST offerings to provide exceptional technical support, services, and a comprehensive catalog of products to meet our customers' needs. Cygnus consistently supports and advances technologies to enhance safety and help accelerate the progress of new therapeutic monoclonal antibodies, biosimilars, cell and gene therapies through the development and regulatory approval process. We're very proud that Cygnus kits continue to have a 100% participation rate and support the safety testing of all 24 of the 24 FDA or EMA-approved CAR-T cell and gene therapies. Before I turn the call over to Kevin, I'd like to mention that later this week, we'll be publishing our 2024 Sustainability Report. Without question, our commitment to sustainability goes hand in hand with achieving our company's long-term strategic objectives. On Slide 12, you'll find a preview of the report. This new report covers the 2024 calendar year and provides an expansive look into our evolving sustainability program, with tangible examples of how we're making a positive impact in positioning our business for sustainable growth. Along with the safety and quality of our products, we take pride in our sustainability advancements. We are working diligently to enhance transparency for our customers and investors and to build the infrastructure necessary to return to growth in a socially and environmentally responsible manner. This team has accomplished significant work to date, and we are committed to being responsible corporate citizens. We look forward to keeping you informed about our journey. Moving to Slide 13. I'll now ask Kevin to provide more details on our first quarter performance and our expectations for the balance of the year. Kevin?

Good stuff. Thanks, Trey. As mentioned, I will summarize our financial results for Q1 and then discuss our reaffirmed financial expectations for the full year and leave in some prepared remarks as it relates to some of our actions that we believe help mitigate risk related to global tariffs and trade economics. Let's start with the Q1 financial results on Slide 14. As Trey mentioned, our revenue for the quarter was $47 million. Our GAAP net loss before noncontrolling interests was $53 million for the first quarter of 2025. This compares to a GAAP net loss before noncontrolling interests of $23 million for the comparable first quarter of 2024. Adjusted EBITDA, a non-GAAP measure, was a negative $11 million for Q1 2025 compared to a positive $8 million for Q1 2024. This adjusted EBITDA result was roughly in line with our internal forecast for the quarter. As we discussed in our Q4 call, our overall cost structure impacting adjusted EBITDA before the variable cost of revenues is around $200 million a year, and our overall variable cost of revenues is generally in the 10% to 12% range, based on the product mix and other factors in any given period. Thus, a breakeven annual revenue total for us is currently around $225 million, or thereabouts. On a quarterly basis, all other things being equal, that is about $56 million in revenues to be at an adjusted EBITDA breakeven point on a consolidated basis. With the quarter at $47 million, that would imply an adjusted EBITDA expectation of about negative $9 million or so. And in Q1, we printed a negative $11 million in adjusted EBITDA. In the quarter, the product gross margin and mix within NAP drove cost of sales slightly unfavorable to our internal forecast. Overall, our adjusted EBITDA margin in any given quarter will vary based primarily on revenues, given the high proportion of short-term fixed labor and facility-related costs and the high correlation of adjusted EBITDA-to-revenue performance over these cost levels. We continue to be focused on driving base business revenue growth each quarter to return Maravai to sustainable levels of profitability. We believe the collection of assets we have compiled and our world-class facilities and capacity provide an opportunity to do just that. That having been said, we also remain cognizant and focused on the need to also effectively manage the cost component of this equation and continue to drive process efficiencies and constantly evaluate options to rightsize our cost footprint. Moving to Slide 15 and EPS. Basic and diluted EPS for the first quarter was a loss of $0.21 per share, compared to a loss of $0.09 per share in the first quarter of 2024. Adjusted EPS in Q1 2025 was a loss of $0.08 per share, in line with our expectations for the quarter. Let's advance to balance sheet, cash flow, and other financial metrics on Slide 16. We ended the quarter with $285 million in cash and $298 million in long-term debt. For Q1 2025, cash used in operations was $9 million, compared to $8 million in Q1 2024. On the investing side of the ledger, we saw net cash outflows of $23 million, mostly representing $19 million of cash out for the acquisitions of Officinae Bio and Molecular Assemblies, plus $4 million of net capital expenditures, consistent with our expectations for the quarter. As a reminder, we see full year capital expenditures between $15 million to $20 million for the full year of 2025, mostly tied to expanding the capabilities of our enzyme business within the NAP segment. As Trey mentioned, we are very pleased with the integration of our two recent acquisitions and continue to demonstrate that our ability to operationalize acquired companies and assets quickly is a core competency at Maravai. The investing activities in Q1 through our acquisitions and expanding our enzyme capabilities are investments we see as providing future returns for Maravai, as these are both thoughtful and intentional moves to allow us to increase our internal vertical supply chain and operating capabilities. When combined with the chemistry inputs acquired with MyChem, the combination of our investing activities over the past years gives us much more overall control over our product inputs. When you combine this with the efforts to secure multiple qualified vendors for each critical raw material that we focused on as a result of the pandemic and BioSecure's considerations, we are in an ever-improving position to mitigate risks tied to supplier costs and dependencies. As we sit here today, through the first one third of 2025, we have not yet incurred any direct costs associated with the tariffs. As a reminder, with the exception of Officinae Bio based in Italy, all of our facilities are U.S.-based and our direct supply chain is mainly from U.S.-sourced vendors. Back to the numbers. Depreciation and amortization was $13 million in the quarter, which is in line with our expectations and guidance, which was $50 million to $55 million on an annual basis. Interest expense, net of interest income, was $4 million in the quarter, in line with our quarterly expectation based on our annual guidance of $14 million to $16 million. Stock-based compensation, a noncash charge, was $10 million for the quarter. We ended Q1 with 144 million Class A shares outstanding and 111 million Class B shares outstanding, for a total of 255 million shares outstanding at the end of March on an as-if fully converted basis. Basic and diluted shares used in the GAAP calculation are solely represented by the weighted average A shares due to the loss position and totaled 143 million in the quarter. Total diluted shares used for the adjusted EPS totals in the quarter were 255 million, in line with our expectations and guidance, consistent with prior quarters. Next to Slide 17 and the discussion of the segment performance in the quarter. Our Nucleic Acid Production segment, which includes both our Discovery and GMP products and services marketed under TriLink, Glen Research, and AlphaZyme brands, and also include the integration and consolidation of our Officinae Bio acquisition as of the end of February, had revenues in the first quarter of $29 million and adjusted EBITDA of a negative $9 million. This negative adjusted EBITDA margin was anticipated based on the lower revenue level over our cost base, which is predominantly reflected in this segment given the large cost base of manufacturing operations in our Wateridge and Flanders sites and the fact that the revenues in the quarter had no contributions from high-volume CleanCap demand for vaccines. Our Biologics Safety Testing segment, which includes products from our Cygnus brand, had revenues of $18 million in the first quarter and adjusted EBITDA of $13 million, a continued strong and consistent adjusted EBITDA margin of 70%. As detailed in these segment results, the combined adjusted EBITDA of our operating segments prior to our corporate shared services was $4 million for Q1 2025. Corporate shared service expenses impacting adjusted EBITDA, which includes centralized functions such as human resources, finance and accounting, legal, information technology, and the incremental expenses associated with being a public company, totaled $14 million in the first quarter. This amount reflects a decrease of $2 million from the comparable first quarter of 2024 and is down $4 million from the first quarter of 2023 based on our focused cost actions. Let's turn to Slide 18 and our revenue expectations. We are off to a solid start in 2025. Financial results are aligning with our internal forecasts. Our strategic achievements are positioning us for growth in our base business, enhancing our distinctive portfolio of high-value quality assets and helping to further reduce potential risks associated with global trade concerns. Based on Q1 results and our current assessment of the likely range of revenue outcomes, we remain comfortable with the existing 2025 total revenue range of $185 million to $205 million. As for the cadence of estimated revenues, we anticipate Q2 to likely continue this trend of sequential base business growth and see a range of $45 million to $50 million of revenues for Q2. At the midpoint, this implied expectation of $47.5 million in revenues for Q2 would put the first half of 2025 at about $95 million. This results in an expectation that our second half of 2025 will be $100 million at the midpoint of our full year revenue guide. We are forecasting this slight second half increase based on our risk-adjusted visibility to the GMP pipeline and the expected benefits from investments in both new products and our recently acquired assets that roll up into our NAP segment. At this stage, we still do not have any guaranteed purchase orders for high-volume CleanCap from our historical top customers that have commercially approved vaccines. We continue to monitor and hold discussions with these customers on our regular commercial cadence. Thus, at this stage, our 2025 guidance remains tied solely to our base business expectations. In addition to holding our full year 2025 revenue guidance ranges, 2025 also holds the following unchanged expectations: interest expense net of interest income between $14 million and $16 million; depreciation and amortization between $50 million and $55 million; equity-based compensation, which we show as a reconciling item from GAAP to non-GAAP EBITDA to be between $45 million and $50 million; as-if fully converted diluted average weighted share count for the year of 256 million shares; and finally, total net CapEx of $15 million to $20 million in 2025, and we foresee that CapEx decreasing even further in 2026. Overall, a solid start to the year. I'll now turn the call back over to Trey for some closing remarks.

Thanks, Kevin. So to wrap up on Slide 21, we had a good start to the year and are on track with the revenue guidance range that we communicated during our Q4 and year-end call. Maravai continues to evolve from 2022, where almost 70% of revenue was driven by COVID vaccines, to our reset year here in 2025 with no high-volume CleanCap in our forecast. The post-pandemic reorientation has been challenging, compounded by the recent headwinds for our industry and for the global economy. We will continue to pay close attention to the rapidly shifting trade dynamics and endeavor to minimize the impact to our company, our customers, and stakeholders. As Kevin mentioned in his remarks, we're continuously assessing our cost structure and have supported our commercial, R&D, and IP-related investments by offsetting expenses in other areas. We have a strong $285 million cash position, which is more than enough to manage the reset period. Through all of this, we remain focused on building for the long term, where Maravai has unique opportunities to be a meaningful global player in our space. While managing in the near-term, we continue to make prudent opportunistic investments to enable our long-term strategic vision. I would now like to turn the call over to the operator to open the line for your questions. Thank you.

[Operator Instructions] We'll go first this afternoon to Dan Arias of Stifel.

Hi guys. Thanks for the questions here. Trey, in your prepared remarks, you spoke to a mix of new trials and then some that got nixed, which I think was basically a wash for the quarter. What does your intel tell you about the focus areas for the new trials? And then conversely, the ones that are being discontinued, why are those going away? And within that is sort of a question about how comfortable you are with the idea that pipeline narrowing isn't something that we're starting to see creep back into the conversation as the financing and funding landscape stays the way that it is?

Sure, Dan. Thanks for that. Well, there was a bit of nuance there. The preclinical, which is harder for us to, of course, fully quantify, was relatively flat, but the clinical actually had adds. And one way to look at that is that it may be a manifestation of people focusing on later-stage projects and based on conservatism with their own funding, making sure that they go with their later-stage ideas. The modalities, we reported on those last quarter, and we show a continuing evolution away from obviously, COVID, but also infectious disease, vaccines writ large to all of the different modalities and target areas that mRNA supports. We continue to see that happening. Obviously, it's only been a few months here. But as things enter the clinic, I would say, the breadth and diversity of their targets continues to expand. So we are seeing, to be clear, clinical expansion. And what we reported here over the last few months is that preclinical was flat.

And then if we just think about the next 12 or 18 months, what do you see as the biggest driver of incremental demand here, both on the CleanCap and the BST side? Is it new business wins within the portfolio? Is it the progression of the clinical pipeline as we move from Phase I to Phase II, II to III? Or is it some other factor here? I guess I'm just trying to take a high-level view of the model and think about how we go from where we are today to something in the midterm.

Sure. We don't obviously expect that high-volume CleanCap is 0 forever. But until people give us firm commitments on that, we obviously choose to stay conservative there. From an expansion perspective, you're exactly right. We've presented in prior quarters anonymized examples of how a customer progression through Phase I, II and so on can lead to significantly larger POs. That's just from a reagent purchase perspective. And, of course, now we have -- it hasn't even been a year since we opened the Flanders two service facility, which means that we have the opportunity here with comps quarter-over-quarter to make significant strides with our clients and our partners in the production of the mRNA itself. I mean, a big part of the story here for us is going from being a bulk reagent supplier to supplying hopefully all of the inputs and, where possible, the service of actually producing the drug substance. So to your point, it's all of those things: clinical progression for someone who is just a bulk purchaser of reagent, leads to a larger PO. But we hope to do much more than that.

We'll go next now to Conor McNamara of RBC Capital Markets.

Hey guys, thanks for the questions. Appreciate it. I appreciate all the color you gave on tariffs and trying to lay that out as clearly as possible. If you look at the medium term and maybe longer term, is there any opportunity for you to take share, as 100% of manufacturing is done in the U.S.? Have you started to see either, folks coming to you to build out alternative suppliers? Or is that something that you see as a potential opportunity?

We do. And it's been obviously a high turbulence environment lately. But we do see a renewed interest in the story we have, which is when you tour Flanders, which you and several of the analysts have been able to do, you get to see a chemical production site where inputs are made under GMP, and then the next building where those inputs are used for the production of the mRNA drug substance. So not only are you seeing the assembly of the substance, but you can actually see the inputs, and the supply chain is literally next door. So it's a really -- from one aspect of the tariff and trade conversation, it's really befitting our story. But obviously, mRNA is strong globally, and we want to make sure we ensure continued access to Europe, to APAC, everywhere, because mRNA as a modality is not going away globally, and we see a tremendous amount of interest there. So we have plenty of strength in the vertical supply chain that we've hit on a lot today. But we endeavor to also have the best access possible to those other markets. And so we're definitely trying to take a global view there.

And then just on end markets, if you could comment at all what you're seeing from customers. And if I look at the biopharma customers and uncertainty around drug prices, and then on your academic and government, although it's a small piece of the business, there's been some NIH proposals that would potentially cut a lot of their ability to spend. So just what have you seen from those two customer subsegments recently with new U.S. Policy being proposed and coming out, if their buying patterns have changed or your conversations have changed with them in recent months?

Sure. I appreciate the question. I think I will use the opportunity to hand it to our Chief Commercial Officer, who is on the line from many, many time zones away. Becky, are you there?

Yes. Hi, Trey. Thanks. Yes, thanks for the question. Certainly, it's a rather dynamic environment. Our customers are certainly [Technical Difficulty] the changes within the government entities as it relates to funding grant renewals. To be honest, it's a very mixed bag. We get comments that customers have secured their funding for the next 10 years, and they feel really confident in their ability to continue their work. We also do see customers that are delaying decision-making based on their ability to secure their funding, but it's not deterring them from their mission. I think that we also hear around the regulatory authorities, and I think there's some confidence that if people are already in those conversations, that they feel pretty good about the contacts and where the trajectory of those programs are. As it relates to buying patterns, honestly, on the NAP business, we've seen an increase in our run rate business. But they're at a lower dollar. So that, to me, feels like people are conserving, maybe doing smaller experiments on that R&D side, but the work is continuing. And so I think we have a lot to offer there with our new product introduction, our ability to sell the workflow, and be able to help customers with different pricing pressures. And so those are some of the tactics that we're using to secure new customer acquisition and base business growth. So that's a little bit of flavor of what's happening in the field.

We'll go next now to Dan Leonard of UBS.

Thank you. I have a question related to Conor's right there. I appreciate the revenue pie chart detail, but I didn't see any government piece there. And I just hope to clarify, do you have any government work, whether it be BARDA or otherwise, that we should be mindful of? And I guess that could be either direct exposure or indirect exposure through one of your biopharma customers.

Sure. Well, direct exposure, no. We definitely had quite a bit of work with BARDA when we were building the facility over the last couple of years. But the new facility that BARDA has pandemic access to -- pandemic preparedness program access, all that work has been satisfied, all the money has been received and so on. We don't have any direct assistance through NIH. Of course, as you go through the broader value chain, a lot of work is indirectly supported by NIH. But at the first and second derivative level, we have no direct NIH support. The BARDA program is closed. And our relatively small academic exposure is actually something we hope to increase over time here. It's only 4% or 5% at this point.

And there isn't any BARDA or otherwise exposure through that biopharma section of your business, Trey?

That I would call that secondary or tertiary. Not that we directly know of. We have not -- to the points Becky was making earlier, we've not heard that someone has delayed a program for reasons like that. But yes, certainly keeping our eyes open.

And another cleanup on the BST revenue. It was higher than we were modeling. And I'm curious if there's any seasonality there to point to or if that $18 million per quarter figure is a good figure to use going forward.

Yes. Typically, Q1 is a high point. It does -- they do have a cyclical, I would say, peak, usually around Q1. And I would say more generally that last year, the falloff and the conservatism in the BST market, we felt that in Q2 and Q3. So yes, the deltas would look to be better, but Q1 is -- for Q2 and Q3, respectively, but the Q1 is typically the high point.

Yes, I'll just expand on that a little bit, Dan. It's Kevin here. A couple of things. We had a solid China quarter at BST. We did $3.8 million in China BST. That was actually the second-highest revenue number from China in the last 9 quarters. So that was positive. And then, as Trey said, generally, our revenues follow the biologics manufacturing development cycles. So in the first quarter, there's typically more of those since they're generally open most of the quarter. The fourth quarter, you get holidays, quality, certain shutdowns for cleaning and maintenance and PMs, then you start getting rolling holidays in other parts of the world, et cetera. So that first quarter typically has most manufacturing days, ends up picking up some volume from the slowdown at the end of the year, and then you -- again, we had a strong China quarter. So those 3 components generated a strong quarter. But we would expect it to seasonally dip a little bit. I wouldn't call it seasonality per se, but it's just a little bit of timing related to some of the factors I mentioned.

We go next now to Tejas Savant at Morgan Stanley.

Hey guys, good afternoon and thanks for the time. I'll just follow up on your comments there, Kevin, on China and the strength there that you guys saw in BST. I guess, outside of the typical 2Q and 3Q step down, was there any pull-forward benefit on just some of the chatter around tariffs and geopolitics, et cetera? Just curious as to why you decided to not bake in the 1Q upside into the guide just yet. Is it just conservatism? Is there a pull forward? Just some color on that would be great.

Yes. As you know, we work through distributors ex-U.S. for the BST business. We have a real close relationship and have had distributor in China specifically and the rest of the U.S. -- or ex-U.S. for quite a while. I would think that they were making sure they got what they needed in the first quarter. I don't know if I'd call it pull forward per se, but I think they were certainly monitoring the situation closely. We just met with them actually in North Carolina again. So we have a very close relationship there. We did give them a good shipment early in April to solidify the second quarter there. And I think given the events of this weekend, I think that, I think the room has come down a little bit. We continue to call that flat for the year, and I think that's consistent with what our distributors are seeing. So not a growth factor in China, but an overall flat business. And thus far, as we sit here today, it's been very consistent with our expectations.

And then just a couple of longer-term ones on the end markets here. So first, on the pharma side of things, do you expect any tailwinds from this push for reshoring? Obviously, it feels like it's some ways out, so not a 2025 dynamic, but perhaps into '26 and beyond. Is that a dynamic that you guys are looking to capitalize on? And then conversely, on the academic side of things on that earlier question around just the shift in NIH priorities and budgets and so on, one of the things we wonder about is the shift away from infectious disease. Could we see that weakness play out for you guys with a lag, perhaps not in your academic customer base, which is pretty small, but further down the road on the biopharma side of things on the biotechs?

Yes. Thanks, Tejas. I'll start with the latter question. We showed last quarter that the total share of our program tracker for infectious disease continues to go down, which we think generally is just more a statement of the maturity of the mRNA in the CRISPR space as different go into later phase clinic and so on. And, of course, the COVID push continues to wane. To your first question, the -- yes, the unique position we're in, which I say is unique because it certainly goes counter to the past decade-plus of manufacturing optimization, is that we now have RUO and GMP chemistry, enzyme production and RUO and GMP mRNA production in the U.S. with the U.S. supply chain, and for -- depending on how this goes, and again, there are dynamics that have happened yesterday and this morning, so this is as fluid as the situation gets. But we think that those are good things to have, and I'm appreciative that the Board that and those that preceded me had the foresight to start reinvesting the COVID and the pandemic proceeds in these capabilities, which took two to 3 years to build. But now, as you all know on the call, they're online, they're functioning, they're contributing, and we're glad to have them in this trade environment for sure.

We go next now to Matt Stanton of Jefferies.

Trey, maybe one for you. You guys spiked out the five new license and supply agreements for CleanCap in the quarter, bringing the total to 48. Any more color in terms of types of customers where you saw those wins? And just maybe stepping back a little bit, now that we're at 48 inked for supply and license agreements, talk about your ability to diversify your customer base here? And then, any success you've seen cross-selling the broader Maravai portfolio? I think you called out a few in your prepared remarks, but any more color just driving portfolio adoption across some of those newer supply agreements on the CleanCap side to the broader portfolio?

Sure. Why don't I -- well, we still have Becky. Becky, do you want to take the latter question with the -- actually, you can take both. Becky is intimately involved in our licensing. But latter question was -- I'm sorry, can you repeat, Matt?

Yes. The latter was just around for some of the newer supply agreements from the CleanCap customers, just your ability to cross-sell the broader Maravai portfolio...

Yes, sorry. So cross-selling is early. Go ahead, Becky.

Yes. I mean -- so the license agreements are a good indication of the adoption and commitment by our customers to have a long view on taking CleanCap into the clinic and then beyond into commercial. And so what that allows us to do is have supply agreements and track our adherence to those things, and we've had some very good adherence in Q1, meaning what our customers gave us as nonbinding forecast came to fruition into binding forecasts. And that does allow us, as we have very much took in '24, the ability to monitor and sharpen and manage our supply agreements and have that very good rigor with customers, it has helped us to stay on track to our forecast for that GMP raw material supply. As well as your other question, which is where else do we see those supply agreements? We see those supply agreements in our OEM business. So that might not necessarily be GMP-grade materials. But again, it's -- the cadence of that business is also through supply agreements. And so we do see that as a diversification because many of those OEM customers are either life science customers with a diagnostic application or a next-gen sequencing application. And this is where really that TriLink and Alphazyme portfolio comes together, which I think kind of moves into your next question around that cross-selling. And what we've done is reorganize our sales team here in 2025 to be very focused on customer segmentation, diagnostics, therapeutics and next-gen sequencing. And we've seen some really great opportunities, places like ways for us to get into RFPs where we haven't had that opportunity, ways for us to cross-sell and upsell. We might be selling one item like an enzyme or one item like a custom chemistry and our ability to broaden that and increase our value to those customers. So that is definitely our commercial strategy.

Okay. That's very helpful. And then maybe just -- sorry, go ahead, Trey.

I was just going to give you a little more follow-up there. Of the five we mentioned, there's an academic, there's a CDMO. There are two innovator clinical licenses and an OEM supply license. So a pretty diverse group even within the five there.

Appreciate that color. And then maybe, Trey, just on longer term around market share dynamics, you're kind of mid-30s today when you sum up preclinical in the clinical side. You guys have been innovating here, new products. Also, I think maybe CleanCap just kind of premium product, but premium pricing and maybe a tougher pricing environment and larger pharma looking to push on suppliers. So just how do we think about evolution of competitive dynamics and kind of where you think market share can go for CleanCap over time here?

You bet. It definitely -- obviously, pre-pandemic, the mRNA reagent and service market was mostly TriLink, honestly. And so it definitely is a more competitive space, both on the RUO discovery side as well as the GMP side. We know that, and I think we embrace that. That's why you see continued push for technology development and enhancement. The reality is that COVID era programs were scaling processes people have been working on for five to 10 years, and sometimes more. And this is a period not only of reset from the pandemic and the volumes of infectious disease vaccine, but also people have had the opportunity to test new innovations -- we know and embrace that people will not use the same reagents they used five years ago. They will not use the same processes they used five years ago; and that, ultimately, the cost of mRNA needs to come down to have it take its rightful place as a ubiquitous platform in medicine. So we are embracing that through, as you've heard a couple of times today, through vertical supply, which gives us the opportunity to enable that and embrace a lower cost point that still has plenty of margin, but also to be enabling for every aspect of the inputs, but also the workflow optimization itself, which manifests itself through our service category. So we -- I agree that that's the way the market will go, and we like our position to embrace that.

We go next now to Brandon Couillard of Wells Fargo.

I'll squeeze both of mine in here in one. Trey, can you give us an update on how the Flanders facilities are filling out and your visibility there? And then Kevin, on the margins, should we expect 2Q EBITDA to be similar to the first quarter, i.e., do you expect a more normalized mix on a similar revenue base? And given BST might step down in terms of revenue, should we expect gross margins to kind of fall sequentially as well?

Yes, I'll take the second part of that question first. Yes, generally, Brandon, it's going to be a combination of revenues. I would say as revenue scale, that drops to the bottom line pretty substantially. Certainly, a little bit of drop on sequential BST revenues will pressure. I would look more towards the overall revenue balance. We don't see the cost profile change over the course of the year at this time.

And then, Brandon, I'll take the first half. So Flanders fill out, service is exciting for us, not only because the service takes advantage of our long experience in mRNA, but also, of course, our vertical inputs play into that side as well. But it's mostly from a predictability perspective, we like it because it has the highest actual visibility and customer intimacy. We get to know exactly what's going on with the program and why and so forth. But it also gives us visibility usually two to three quarters in advance. It's one of the reasons that you've seen the cadence of our guidance this year. We knew, of course, that Q1 would be lower and we have things scheduled. And we have mentioned in prior calls the way that they sometimes can move out for reasons beyond our control. But we like the visibility there. We have capacity to handle anything that comes. And it's -- your point is a big reason for the way that we have laid out the cadence of our year. Okay. I think we might have time for -- we'll squeeze one more in just to try to give more folks an opportunity here.

Certainly, Mr. Martin. We'll take that question now from Matt Hewitt of Craig-Hallum.

This might be a little bit of a stretch here, but with the FDA's push about a month ago to shift away from animal testing towards AI and some of these other new modalities, does that create a potential tailwind for Officinae? And what are you hearing with that new product just launched, what are you hearing from customers initially?

Sure. Thank you, Matt. We are really excited about Officinae, just closed it a couple of months ago. And are -- we're very focused on the primary driver for that was just the new design environment it's going to give to all of our customers in the discovery space. But yes, the exciting unknown is how far we could take the machine learning capabilities that they bring to us. We are -- we have kept the whole team. We intend to keep investing in that side of it. Early days, we have provided service for process optimization and trialing for many years and a Officinae was founded to do what we described in the call here today. But I see AI generally in the field driving much, much more of the work. And to your point, to model biological systems without animal testing using cell testing. It's -- there's no way I can imagine doing it without some significant AI-driven assistance to predict biological system reaction without having the full biological system.

That's great.

Okay. With that, I know we're at time. I appreciate everyone staying all the way through, and thank you all for joining us for our call today. I'll just wrap here by saying that we are executing on our return to growth strategy through innovation, through customer intimacy and through enablement. Year-to-date, we've introduced significant innovations to the market, and they further extend our leadership across the genomic medicine workflows and continue to advance our differentiation within our BST segment. We are pleased with the integration progress of our recent acquisitions, and we will continue to add important partnerships to enable our space in the months and quarters going forward here. We remain confident in the unique value we provide our customers for the life-changing developments of the next generation of medicines and diagnostics. And finally, we remain committed to building a strong foundation for long-term sustainable growth of our businesses and look forward to keeping you updated on our progress in the coming months. So thanks, everyone, for joining us, and have a great evening.

Thank you, Mr. Martin. Again, ladies and gentlemen, that will conclude today's Maravai LifeSciences Q1 2025 Results Earnings Call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.